Should I invest with cash or use a mortgage to get leverage?

Rental yields are at their highest rate for 14 years, and house prices are rising in the UK. With more property value and rental growth coming in the next four years, this is a great time to invest in UK buy-to-let property and build a portfolio – but what’s the best way to do that in 2025?

The two most common investment options are to buy with cash or to use mortgages to leverage your funds. We’ve taken a closer look at those options and analysed which is the best choice for different types of investors.

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Benefits of investing in UK property with cash

Buying a property outright with cash is a tried and tested UK property investment strategy. If you have the funds to do so, you will receive the entire rental income as profit minus the percentage used for a property letting and management agent.

You won’t have to worry about debt or interest payments, and the process of investing is often faster if you do not have to arrange a mortgage at the same time. That’s especially true if you are buying off-plan property. In that case, you agree on a price at the beginning and pay it when construction is finished. There are no worries about securing a mortgage in the six months leading up to completion and all the paperwork that comes with it.

Finally, buying in cash can be a lower-risk option. If you own your properties outright, you never have to think about mortgage repayments if the market fluctuates or you can’t find a tenant.

Investing with cash is therefore ideal for investors who…

• Want to receive the full rent each month to subsidise their income or pension
• Prefer to be debt-free and not worry about a mortgage
• Want a lower risk option with less administration

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Advantages of leveraging buy-to-let investments with a mortgage

On the other hand, you could choose to use a mortgage to leverage your buying power. While mortgages do come with fees you will have to pay back, borrowing has its advantages compared to buying with cash.

The most important one is that you can invest in more properties. For example, a £300,000 cash pot could fund one purchase outright, or be used as a £100,000 deposit on three properties where a mortgage makes up the balance. In this scenario, you could triple your potential rental income and capital appreciation. You will also have a more diversified portfolio, which is a less risky proposition than having all your cash in one property.

Even better news is that current buy-to-let mortgage rates in the UK are lower than they have been for two years. They are likely to continue falling even further in the future thanks to the Bank of England’s ongoing cuts to the base rate of interest.

That makes leveraging a more cost-effective strategy now than it has been for a long time. It also means that if you buy off-plan UK buy-to-let property, it might become even cheaper in the future.

Investing with a mortgage is therefore ideal for investors who…

• Want to grow their portfolio rapidly, beyond what they would be able to afford in cash
• Are comfortable taking on debt to cover their purchases
• Have a higher risk tolerance that can deal with potential void periods and market changes

To get more details on the benefits of leveraging as a property investment strategy, see our dedicated article on the subject here.

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Is cash or a mortgage the best way to invest in UK buy-to-let property?

There is no “best” way to invest in buy-to-let property. The important thing is that you do what suits your financial goals and budget. If your goal is to grow your portfolio beyond your current cash reserves, then look at leveraging. If you want to buy one property and get the full rental income each month, then buy it in cash.

If you’re not sure how to begin, the best way to get started is to contact our team of experts and get their assistance in developing a bespoke investment strategy. You can also keep up to date with the latest UK property market insights and do your research on investment markets and locations.

Want to learn more about investing in UK buy-to-let property? Contact us today for a consultation to get started.